Fed Officials Warn Inflation Persistence, Labor Market Risks Prompt Caution

The Federal Reserve approved its second straight interest-rate cut, lowering the policy rate to a 3.75%–4.0% range, and Chair Jerome Powell said inflation has moved up since earlier in the year and remains somewhat elevated relative to the Fed’s 2% goal. Powell warned that tariffs could add further upward pressure on inflation and emphasized the Fed is not assuming recent inflation will be a one-time spike, saying policymakers would respond to significant changes in the economy. He also said risks have shifted from higher inflation to the labor market, noting downside risks to employment have risen in recent months. Dallas Fed President Lorie Logan likewise warned inflation is too high and is likely to exceed the 2% goal for longer than desirable, signaling continued vigilance among Fed officials.